On March 25, 2014, the U.S. Environmental Protection Agency (“EPA”) and the U.S. Army Corps of Engineers (“USACE”) announced the release of their proposed rule redefining what waters fall under federal jurisdiction under the Clean Water Act (“CWA”). The agencies say the change will clarify protection under the CWA for streams and wetlands. Industry groups oppose the change as a significant overreaching of federal regulatory power.

The proposed rule redefines federal water pollution regulation and will impact states, municipalities, and industries, including mining, construction, real estate development, pipelines, and several others. The proposal purports to “clarify” the CWA’s regulatory jurisdiction and enhances protections for certain heretofore unregulated bodies of water, particularly those that are seasonal or dependent on heavy rainfall. The proposal changes the definition of “waters of the United States” in two significant ways: (1) it states that all waters adjacent to jurisdictional waters will themselves be jurisdictional (Under the current rule, only adjacent wetlands are jurisdictional.); and (2) it purports to implement the “significant nexus” test, as introduced in 2006 by the Supreme Court, which states that a particular water or wetland can have a significant nexus (either individually or in combination with other waters or wetlands in the same region) to a U.S. water and therefore be jurisdictional even it is not significant in and of itself. In short, the proposal deems that, under the CWA, (1) most seasonal and rain dependant streams are protected, (2) wetlands near rivers and streams are protected, and (3) other types of waters that have more uncertain connections with downstream water will be evaluated through a case-specific analysis of whether the connection is significant.

EPA released a draft report from its scientific advisory board in September 2013 that provided the foundation for the new proposed rule, finding that wetlands and transition areas between terrestrial and aquatic ecosystems are integrated with streams and rivers. The report also found that streams and other tributary systems are connected to downstream waters, no matter what their size or how frequently they flow. At the time of this rule proposal, however, that draft report had not been finalized.

In 2001 and 2006, the U.S. Supreme Court addressed the question of whether certain waters were federally regulated. These decisions, however, did not settle the issue, and determining whether the CWA covered streams and wetlands became even more confusing and complex. In the 2006 decision, the Supreme Court found that there must be a “significant nexus” between a water area and a covered body of water in order for the government to have regulatory authority over it. Rapanos v. United States, 547 U.S. 715 (2006). In its new proposal, the agencies apply Justice Kennedy’s term “significant nexus” from Rapanos. In doing so, the agencies have added a number of waters to the coverage of the CWA with no additional analysis needed and conclude that most tributaries, ephemeral streams, and other bodies have a significant connection to downstream waters.

The result is that the proposal will bring nearly all rivers, creeks, and streams under the protection of the CWA, leading to a major expansion of federal water authority.

Reactions to the proposed rule have been sharply divided. It has been lauded by environmental and sportsmen’s groups and swiftly criticized by various industry groups and businesses. Many, primarily environmental advocates, state that the proposed rule will benefit businesses by increasing efficiency in determining coverage of the CWA. Gina McCarthy, EPA’s Administrator stated that the EPA’s “proposal does not add to, or expand, the scope of waters historically protected under the Clean Water Act. It clarifies which waters are protected and which waters are not,” which provides certainty to businesses.

Those who oppose the change, on the other hand, anticipate that it will significantly expand federal power over ditches, ponds, and other bodies of water located on private property. These opponents claim that it does not merely codify existing EPA guidance, but creates new definitions and concepts that treat a simple hydrologic connection to a navigable or interstate water, as a “water[] of the United States.” Many argue that, through this proposal, federal jurisdiction is expanded to cover environmentally and economically insignificant waters as if they were U.S. waters.

The new definition of “waters of the United States” is critical to those in various industries. In construction, for example, contractors who want to build near or around federally regulated waters must obtain a USACE permit before they can start work. The National Association of Home Builders (NAHB) criticized the proposal, in that it would expand regulation without a corresponding environmental benefit. NAHB President, Kevin Neely, said that the “EPA has added just about everything into its jurisdiction by expanding the definition of a tributary – even ditches and man-made canals.” The proposal has also been criticized for its ability to drive small companies out of business, costing builders fines of as much as $37,500 per day. The National Mining Association called EPA’s assertion that the proposal will benefit businesses by providing more certainty “risible.”

This proposed change to the CWA is of crucial interest to many of our clients in various industries. The change has a potentially large impact on the construction, real estate development, oil and gas, pipeline, and mining industries.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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